Koah: Rethinking AI Monetization with Ads in Chat Apps
Building an AI application is only the first step. The real challenge lies in making it sustainable. Koah, a young startup, has raised 5 million dollars in seed funding to address this challenge with an unexpected approach: advertisements within AI conversations. According to Nic Baird, Koah’s co-founder and Chief Executive Officer, this model can scale globally.
The reasoning is clear. Most AI apps outside Silicon Valley cannot rely on users willing to pay 20 dollars a month. Yet the costs of AI inference remain the same. These developers need a reliable source of revenue. Advertisements offer a practical path toward long-term sustainability.
Ads Built into the Conversation, Not Just Sidebar Clutter
Koah is not introducing banner ads or intrusive pop-ups. Instead, it integrates sponsored suggestions directly into AI conversations, but only where they add value. For instance, a user seeking advice on launching a startup might see a relevant suggestion for UpWork at that moment. This transforms advertisements from disruptive distractions into timely, useful recommendations.
Koah is also clear about its focus. It is not targeting large players such as ChatGPT, who will manage their own monetization. Rather, Koah is building for smaller, niche AI applications that rely on existing models, particularly in regions where subscriptions are less popular.
Early Results That Show Promise
The numbers are already encouraging. Koah reports click-through rates of about 7.5 percent, which is four to five times higher than what traditional ad networks such as AdMob or AppLovin achieve in this context. Early partners using Koah’s system have earned close to 10,000 dollars within their first month. Most importantly, user engagement levels have remained steady. In some cases, they have even improved, suggesting that well-placed and relevant advertisements can enhance the user experience.
Backing, Strategy, and Industry Context
Koah’s funding round was led by Forerunner, with additional support from South Park Commons and Andrew Karam, co-founder of AppLovin. Nicole Johnson, a partner at Forerunner, highlighted what she called the “elephant in the room” in AI: monetization. She explained that subscription models often create fatigue and lead to high churn rates. For this reason, the industry requires multiple revenue streams. Johnson describes Koah as an essential monetization layer for consumer AI services, filling a gap that many developers have struggled with.
Where AI Ads Fit in the Bigger Advertising Picture
The placement of AI ads is unique. They sit in the middle of the sales funnel. They go further than a casual scroll on Instagram but do not yet reach the purchase-driven intent of a Google search. Users often turn to AI for recommendations before making a decision. Koah’s goal is to capture that intent in real time. Baird emphasizes that the aim is not to force display ads into conversations. The vision is to understand the user’s needs, anticipate them, and provide suggestions within the natural flow of dialogue.
Why This Could Unlock New AI Innovation
If advertisements can finance AI applications without reducing user satisfaction, developers gain freedom to innovate. This model enables the creation of more affordable and creative tools, particularly in markets that cannot sustain expensive subscriptions. It paves the way for apps with unique styles, experimental features, and practical value for everyday users. By removing the constant dependency on venture capital, Koah could help spark a new wave of AI innovation across the globe.